Albert R. and Phyllis F. Dworkin - Page 9

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and Roberts were general partners together in other investments
and maintained an office together in New York City. During 1981
Roberts served as second vice chairman of the Mountain Ridge
State Bank (Mountain Ridge) in West Orange, New Jersey.
As general partner, Roberts was personally responsible for
the full amount due on the Northeast partnership lease.
Petitioner contacted Roberts to discuss the Northeast
transaction. Petitioner was provided a copy of Roberts'
individual financial statement dated August 20, 1981. The
financial statement showed a net worth for Roberts in the amount
of $3,830,000. Petitioner asked his banker, Joseph Dowding
(Dowding), to run a background check on Roberts and Mountain
Ridge. Dowding reported that Mountain Ridge was a small bank and
that its president had told him that Roberts had a fine business
reputation. Also, a financial statement for Mountain Ridge was
forwarded to petitioner.
Petitioner was provided a copy of the offering memorandum
for Northeast. The offering memorandum summarized the Northeast
transaction and detailed the tax risk factors, business risk
factors, and the business of the partnership, inter alia. The
offering memorandum unambiguously disclosed that both Grant and
Roberts were promoters of Northeast. Appendices to the
memorandum include reports of F & G's evaluators, Stanley M.
Ulanoff and Samuel Z. Burstein, and a draft letter of counsel
regarding the tax risks associated with Northeast. Petitioner